Editors' pick: Originally published Oct. 21.
Earlier in the week, Domino's served up one of the most mind-blowing third quarter earnings reports in the fast-food space so far this year. The pizza joint's U.S. same-store sales surged 13% from the prior year, marking the 22nd straight quarter of gains. Earnings spiked 43.3% year over year to 96 cents a share, surpassing analysts' estimates of 90 cents.
"It [our success] has really been about a few big, bold ideas that have a real effect for the customer -- we got our food right about six years ago, digital is working and the new loyalty program is helping," Doyle told TheStreet in an interview.
For Domino's, its strong quarter -- against a backdrop of sluggish spending on fast food due to people eating more at home amid falling supermarket prices -- could be boiled down to several reasons.
First is a relentless focus on making pizza easier to order on mobile devices. "The company has been benefiting from a steadily growing online/digital ordering mix that currently represents over 50% of domestic orders, and it has a long runway for growth," pointed out Bank of America Merrill Lynch analyst Gregory Francfort in a recent note. Case in point: In early September, Domino's introduced a bot for Facebook's (FB) - Get Report messaging platform that allows users to order pizzas straight from their chat.
Second, Domino's arch-rival Pizza Hut (owned by Yum! Brands (YUM) - Get Report ) continues to struggle with its marketing messages and digital ordering technology. That has allowed Domino's to take market share. Said Nomura analyst Mark Kalinowski, "We believe that continued woes by Pizza Hut in the U.S. -- which reported that its third-quarter same-store sales declined by 2% -- are largely Domino's gain, although Domino's certainly appears to be taking share from regional chains and independents as well."
Toss in building momentum behind Domino's digitally-based loyalty program, launched nationally late last year, and it's pretty easy to understand how the pizza chain baked up a savory quarter for investors.
Domino's really dismantled McDonald's during the third quarter.
As for McDonald's, it doesn't have a mobile ordering app or a rewards program in the U.S. yet. Both are reportedly in the works for a 2017 launch.
In the meantime, the lack of a digital presence for McDonald's shows up in the form of far weaker sales than the tech savvy Domino's.
McDonald's U.S. sales rose 1.3% in the third quarter, relatively in line with analyst estimates, but a slower pace than the 1.8% increase seen in the second quarter. In the first quarter, McDonald's U.S. same-store sales rose 5.4%.
The results were even more disappointing considering McDonald's aggressive TV marketing of its new Chicken Nuggets made without artificial ingredients during the Olympics and steady stream of ads for its all-day breakfast platform. As a result of the slowdown and tough year-ago comparisons, McDonald's may be on track to show a decline in sales in the U.S. for the fourth quarter.
"Investors are well prepared for a return to negative same-store sales in the fourth quarter," said analysts at Barclays in a recent note.
If Micky D's had mobile ordering, maybe its near-term outlook in the U.S. would be a little different.